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Begin New Search Topic International Trade and Finance Content Type Working Paper Publishing Institution Center for Global Development

1. Developing a More Inclusive US Trade Policy at Home and Abroad

Author:
Kimberly Ann Elliott
Publication Date:
06-2019
Content Type:
Working Paper
Institution:
Center for Global Development
Abstract:
American policymakers have failed to adequately respond to concerns about globalization’s effects and the resulting backlash has taken an ugly turn in recent years. While globalization is only one of many factors contributing to economic dislocation, sluggish wage growth and inequality in the United States, foreigners, and developing countries in particular, are frequently the target of those who are frustrated at being left behind. Yet few realize that US trade policy effectively discriminates against poorer countries. In addition, provisions in trade agreements that tilt the playing field in favor of business interests over those of American consumers and workers also often undermine development priorities in partner countries. American policymakers should rethink the substance and process of trade policy and negotiations to spread the benefits more broadly, at home and abroad.
Topic:
Globalization, International Trade and Finance, Inequality, and Domestic Policy
Political Geography:
United States and North America

2. Gender Matters in Economic Empowerment Interventions: A Research Review

Author:
Mayra Buvinic and Megan O'Donnell
Publication Date:
05-2017
Content Type:
Working Paper
Institution:
Center for Global Development
Abstract:
A review of the recent evaluation evidence on financial services and training interventions questions their gender neutrality and suggests that some design features in these interventions can yield more positive economic outcomes for women than for men. These include features in savings and ‘Graduation’ programs that increase women’s economic self-reliance and self-control, and the practice of repeated micro borrowing that increases financial risk-taking and choice. ‘Smart’ design also includes high quality business management and jobs skills training, and stipends and other incentives in these training programs that address women’s additional time burdens and childcare demands. Peer support may also help to increase financial risk taking and confidence in business decisions, and may augment an otherwise negligible impact of financial literacy training. These features help women overcome gender-related constraints. However, when social norms are too restrictive, and women are prevented from doing any paid work, no design will be smart enough. Subjective economic empowerment appears to be an important intermediate outcome for women that should be promoted and more reliably and accurately measured. More research is also needed on de-biasing service provision, which can be gender biased; lastly, whenever possible, results should be sex-disaggregated and reported for individuals as well as households.
Topic:
Gender Issues, International Trade and Finance, and Global Political Economy
Political Geography:
Global Focus

3. Expanding Global Liquidity Insurance: Myths and Realities of the IMF’s Precautionary Credit Lines

Author:
Nancy Birdsall, Liliana Rojas-Suarez, and Anna Diofasi
Publication Date:
02-2017
Content Type:
Working Paper
Institution:
Center for Global Development
Abstract:
Despite increasing volatility in the global economy, the uptake of the IMF’s two precautionary credit lines, the Flexible Credit Line (FCL) and the Precautionary and Liquidity Line (PLL), has remained limited—currently to just four countries. The two new lending instruments were created in the wake of the global financial crisis of 2008 to enable IMF member states to respond quickly and effectively to temporary balance of payment needs resulting from external shocks. Both credit lines offer immediate access to considerable sums—over 10 times a country’s IMF quota in some cases with no (FCL) or very limited (PLL) conditionality. This paper addresses four misconceptions (or ‘myths’) that have likely played a role in the limited utilization of the two precautionary credit lines: 1) too stringent qualification criteria that limit country eligibility; 2) insufficient IMF resources; 3) high costs of precautionary borrowing; and 4) the economic stigma associated with IMF assistance. We show, in fact, that the pool of eligible member states is likely to be seven to eight times larger than the number of current users; that with the 2016 quota reform IMF resources are more than adequate to support a larger precautionary portfolio; that the two IMF credit lines are among the least costly and most advantageous instruments for liquidity support countries have; and that there is no evidence of negative market developments for countries now participating in the precautionary lines.
Topic:
International Trade and Finance and Global Political Economy
Political Geography:
Global Focus

4. Fiscal Policy, Income Redistribution and Poverty Reduction in Low and Middle Income Countries

Author:
Nora Lustig
Publication Date:
01-2017
Content Type:
Working Paper
Institution:
Center for Global Development
Abstract:
Current policy discussion focuses primarily on the power of fiscal policy to reduce inequality. Yet, comparable fiscal incidence analysis for 28 low and middle income countries reveals that, although fiscal systems are always equalizing, that is not always true for poverty. In Ethiopia, Tanzania, Ghana, Nicaragua, and Guatemala the extreme poverty headcount ratio is higher after taxes and transfers (excluding in-kind transfers) than before. In addition, to varying degrees, in all countries a portion of the poor are net payers into the fiscal system and are thus impoverished by the fiscal system. Consumption taxes are the main culprits of fiscally-induced impoverishment. Net direct taxes are always equalizing and indirect taxes net of subsidies are equalizing in nineteen countries of the 28. While spending on pre-school and primary school is pro-poor (i.e., the per capita transfer declines with income) in almost all countries, pro-poor secondary school spending is less prevalent, and tertiary education spending tends to be progressive only in relative terms (i.e., equalizing but not pro-poor). Health spending is always equalizing but not always pro-poor. More unequal countries devote more resources to redistributive spending and appear to redistribute more. The latter, however, is not a robust result across specifications.
Topic:
International Trade and Finance and Global Political Economy
Political Geography:
Global Focus

5. Analytic Foundations: Measuring the Redistributive Impact of Taxes and Transfers

Author:
Ali Enami, Nora Lustig, and Rodrigo Aranda
Publication Date:
01-2017
Content Type:
Working Paper
Institution:
Center for Global Development
Abstract:
This paper provides a theoretical foundation for analyzing the redistributive effect of taxes and transfers for the case in which the ranking of individuals by pre-fiscal income remains unchanged. We show that in a world with more than a single fiscal instrument, the simple rule that progressive taxes or transfers are always equalizing not necessarily holds, and offer alternative rules that survive a theoretical scrutiny. In particular, we show that the sign of the marginal contribution unambiguously predicts whether a tax or a transfer is equalizing or not.
Topic:
International Political Economy and International Trade and Finance
Political Geography:
Global Focus

6. The Impact of Taxes and Social Spending on Inequality and Poverty in El Salvador

Author:
Nora Lustig, Margarita Beneke, and José Andrés Oliva
Publication Date:
01-2017
Content Type:
Working Paper
Institution:
Center for Global Development
Abstract:
We conducted a fiscal impact study to estimate the effect of taxes, social spending, and subsidies on inequality and poverty in El Salvador, using the methodology of the Commitment to Equity project. Taxes are progressive, but given their volume, their impact is limited. Direct transfers are concentrated on poor households, but their budget is small so their effect is limited; a significant portion of the subsidies goes to households in the upper income deciles, so although their budget is greater, their impact is low. The component that has the greatest effect on inequality is spending on education and health. Therefore, the impact of fiscal policy is limited and low when compared with other countries with a similar level of per capita income. There is room for improvement using current resources.
Topic:
International Trade and Finance, Poverty, and Income Inequality
Political Geography:
El Salvador

7. Guarantees, Subsidies, or Paying for Success? Choosing the Right Instrument to Catalyze Private Investment in Developing Countries

Author:
Owen Barder and Theodore Talbot
Publication Date:
05-2015
Content Type:
Working Paper
Institution:
Center for Global Development
Abstract:
Governments, donors, and public sector agencies are seeking productive ways to ‘crowd in’ private sector involvement and capital to tackle international development challenges. The financial instruments that are used to create incentives for private sector involvement are typically those that lower an investment’s risk (such as credit guarantees) or those that lower the costs of various inputs (such as concessional loans, which subsidise borrowing).
Topic:
Development, Economics, and International Trade and Finance

8. Stunted Growth: Why Don't African Firms Create More Jobs?

Author:
Vijaya Ramachandran, Leonardo Iacovone, and Martin Schmidt
Publication Date:
02-2014
Content Type:
Working Paper
Institution:
Center for Global Development
Abstract:
Many countries in Africa suffer high rates of underemployment or low rates of productive employment; many also anticipate large numbers of people to enter the workforce in the near future. This paper asks the question: Are African firms creating fewer jobs than those located elsewhere? And, if so, why? One reason may be that weak business environments slow the growth of firms and distort the allocation of resources away from better-performing firms, hence reducing their potential for job creation.
Topic:
Economics, Industrial Policy, International Trade and Finance, Markets, and Fragile/Failed State
Political Geography:
Africa and Israel

9. Estimating Illicit Flows of Capital via Trade Mispricing: A Forensic Analysis of Data on Switzerland

Author:
Alex Cobham, Petr Janský, and Alex Prats
Publication Date:
01-2014
Content Type:
Working Paper
Institution:
Center for Global Development
Abstract:
This paper assesses the role of Switzerland as the leading hub for global commodities trading, in terms of the patterns of prices received by original exporting countries and subsequently by Switzerland and other jurisdictions. We find support for the hypotheses that (i) the average prices for commodity exports from developing countries to Switzerland are lower than those to other jurisdictions; and that (ii) Switzerland declares higher (re-)export prices for those commodities than do other jurisdictions. This pattern implies a potential capital loss for commodity exporting developing countries and we provide a range of estimates of that loss - each of which suggests the scale is substantial (the most conservative is around $8 billion a year) and that the issue merits greater research and policy attention. An important first step would be a Swiss commitment to meet international norms of trade transparency.
Topic:
Economics, Industrial Policy, International Trade and Finance, Markets, and Developing World
Political Geography:
Europe and Switzerland

10. How Should Donors Respond to Resource Windfalls in Poor Countries?

Author:
Alan Gelb, Anton Dobronogov, and Fernando Brant Saldanha
Publication Date:
07-2014
Content Type:
Working Paper
Institution:
Center for Global Development
Abstract:
Natural resources are being discovered in more countries, both rich and poor. Many of the new and aspiring resource exporters are low-income countries that are still receiving substantial levels of foreign aid. Resource discoveries open up enormous opportunities, but also expose producing countries to huge trade and fiscal shocks from volatile commodity markets if their exports are highly concentrated. A large literature on the "resource curse" shows that these are damaging unless countries manage to cushion the effects through countercyclical policy. It also shows that the countries least likely to do so successfully are those with weaker institutions, and these are most likely to remain as clients of the aid system. This paper considers the question of how donors should respond to their clients' potential windfalls. It discusses several ways in which the focus and nature of foreign aid programs will need to change, including the level of financial assistance. The paper develops some ideas on how a donor like the International Development Association might structure its program of financial transfers to mitigate volatility. The paper outlines ways in which the International Development Association could use hedging instruments to vary disbursements while still working within a framework of country allocations that are not contingent on oil prices. Simulations suggest that the International Development Association could be structured to provide a larger degree of insurance if it is calibrated to hedge against large declines in resource prices. These suggestions are intended to complement other mechanisms, including self-insurance using Sovereign Wealth Funds (where possible) and the facilities of the International Monetary Fund.
Topic:
Economics, International Trade and Finance, Natural Resources, and Foreign Aid
Political Geography:
Uganda, Kenya, Tanzania, and Ghana

11. Savings by and for the Poor: A Research Review and Agenda

Author:
Dean Karlan, Jonathan Zinman, and Aishwarya Lakshmi Ratan
Publication Date:
11-2013
Content Type:
Working Paper
Institution:
Center for Global Development
Abstract:
The poor can and do save, but often use formal or informal instruments that have high risk, high cost, and limited functionality. This could lead to undersaving compared to a world without market or behavioral frictions. Undersaving can have important welfare consequences: variable consumption, low resilience to shocks, and foregone profitable investments.
Topic:
Development, Economics, Globalization, International Trade and Finance, Markets, Poverty, and Financial Crisis

12. Declining Inequality in Latin America in the 2000s: The Cases of Argentina, Brazil, and Mexico.

Author:
Nora Lustig, Luis F. Lopez-Calva, and Eduardo Ortiz-Juarez
Publication Date:
10-2012
Content Type:
Working Paper
Institution:
Center for Global Development
Abstract:
Between 2000 and 2010, the Gini coefficient declined in 13 of 17 Latin American countries. The decline was statistically significant and robust to changes in the time interval, inequality measures, and data sources. In-depth country studies for Argentina, Brazil, and Mexico suggest two main phenomena underlie this trend: a fall in the premium to skilled labor and more progressive government transfers. The fall in the premium to skills resulted from a combination of supply, demand, and institutional factors. Their relative importance depends on the country.
Topic:
Development, Economics, Emerging Markets, Globalization, International Trade and Finance, Poverty, and Social Stratification
Political Geography:
Brazil, Argentina, Latin America, and Mexico

13. Incentives for Life: Cash-on-Delivery Aid for Tobacco Control in Developing Countries

Author:
Amanda Glassman and Thomas J. Bollyky
Publication Date:
04-2012
Content Type:
Working Paper
Institution:
Center for Global Development
Abstract:
Fewer people are smoking in the United States, Europe, and most of the developing world. Excise taxes, bans on smoking in public places, and graphic health warnings are achieving such dramatic reductions in tobacco use in developed countries that a recent Citigroup Bank investment analysis speculated that smoking could virtually disappear in wealthy countries over the next thirty to fifty years.
Topic:
Agriculture, Development, Gender Issues, International Trade and Finance, and Foreign Aid
Political Geography:
United States and Europe

14. Capital Requirements under Basel III in Latin America: The Cases of Bolivia, Colombia, Ecuador and Peru

Author:
Liliana Rojas-Suarez, Arturo J. Galindo, and Marielle del Valle
Publication Date:
05-2012
Content Type:
Working Paper
Institution:
Center for Global Development
Abstract:
A number of banks in developed countries argue that the new capital requirements under Basel III are too stringent and that implementing the proposed regulation would require raising large amounts of capital, with adverse consequences on credit and the cost of finance. In contrast, many emerging market economies claim that their systems are adequately capitalized and that they have no problems with implementing the new capital requirements. This paper conducts a detailed calculation of capital held by the banks in four Latin American countries—known as the Andean countries: Bolivia, Colombia, Ecuador and Peru—and assesses the potential effects of full compliance with the capital requirements under Basel III. The conclusions are positive and show that while capital would decline somewhat in these countries after they make adjustments to comply with the new definition of capital under Basel III, they would still meet the Basel III recommendations on capital requirements. More importantly, these countries would hold Tier capital to risk-weighted-asset ratios significantly above the 8.5 percent requirement under Basel III. That is, not only the quantity, but also the quality of capital is adequate in the countries under study. While encouraging, these results should not be taken as a panacea since the new regulations are only effective if coupled with appropriate risk management and supervision mechanisms to control the build-up of excessive risk-taking by banks. Further research into these areas is needed for a complete assessment of the strength of banks in the Andean countries.
Topic:
Debt, Economics, International Trade and Finance, and Monetary Policy
Political Geography:
Colombia, Latin America, Peru, Ecuador, and Bolivia

15. Competitiveness in Central America: The Road to Sustained Growth and Poverty Reduction

Author:
Liliana Rojas-Suarez, José Luis Guasch, and Veronica Gonzales
Publication Date:
06-2012
Content Type:
Working Paper
Institution:
Center for Global Development
Abstract:
Over the last decade, Central American countries—Costa Rica, El Salvador, Guatemala, Honduras, and Nicaragua—have made significant progress in social and economic areas. In particular, they have stabilized their economies after decades of civil war and the economic volatility that plagued the region through the 1990s. Most countries in Central America have taken important steps to improve their business climates, particularly by enhancing macroeconomic stability, improving the soundness of their financial systems, making improvements in infrastructure services and trade facilitation, reducing red tape, and simplifying their regulatory and tax frameworks. As a result, before the 2008 financial crisis, GDP per capita in Central America grew at an average rate of 3 percent per year from 2003 to 2008, which, albeit modest, was the most robust and stable period of growth the region had witnessed since the early 1990s. However, despite this achievement, Central American economies are still lagging behind the rest of Latin America and other middle-income countries by per-capita growth rates of 0.5 to 2 percentage points. Even more worrying are the levels of poverty and inequality, which show the lack of inclusiveness in their growth models. Moreover, recent developments in the region show a number of red flags that are weakening macroeconomic and democratic stability. Significant structural changes are urgently needed to secure sustained and inclusive growth.
Topic:
Development, Economics, Emerging Markets, and International Trade and Finance
Political Geography:
Latin America and Central America

16. What's Wrong with Dodd-Frank 1502? Conflict Minerals, Civilian Livelihoods, and the Unintended Consequences of Western Advocacy

Author:
Laura E. Seay
Publication Date:
01-2012
Content Type:
Working Paper
Institution:
Center for Global Development
Abstract:
Although its provisions have yet to be implemented, section 1502 of the Dodd-Frank Wall Street Reform and Consumer Protection Act is already having a profound effect on the Congolese mining sector. Nicknamed “Obama's Law” by the Congolese, section 1502 has created a de facto ban on Congolese mineral exports, put anywhere from tens of thousands up to 2 million Congolese miners out of work in the eastern Congo, and, despite ending most of the trade in Congolese conflict minerals, done little to improve the security situation or the daily lives of most Congolese. In this report, Laura Seay traces the development of section 1502 with respect to the pursuit of a conflict minerals-based strategy by U.S. advocates, examines the effects of the legislation, and recommends new courses of action to move forward in a way that both promotes accountability and transparency and allows Congolese artisanal miners to earn a living.
Topic:
Security, Development, Economics, International Trade and Finance, Markets, Poverty, Natural Resources, and Financial Crisis
Political Geography:
Africa, United States, and Democratic Republic of the Congo

17. Getting Real on Trade with Pakistan: Duty-Free Market Access as Development Policy

Author:
Kimberly Ann Elliott
Publication Date:
02-2011
Content Type:
Working Paper
Institution:
Center for Global Development
Abstract:
The combination of relatively high American barriers to trade in textiles and apparel and the importance of the sector to the Pakistani economy make increased market access a potentially powerful tool of U.S. policy. Unfortunately, recent proposals to extend duty-free market access for Pakistani exports restrict the product and geographic coverage so severely that they would be meaningless in practice. Moreover, the analysis in this paper suggests that the concerns about job loss in the U.S. textile industry from broader coverage are exaggerated. A serious trade package for Pakistan would expand the geographic coverage to allow duty-free imports from all of Pakistan, expand the product coverage for clothing, and cover all other Pakistani exports as well.
Topic:
International Trade and Finance and Markets
Political Geography:
Pakistan and United States

18. Better Factories Cambodia: An Instrument for Improving Industrial Relations in a Transnational Context

Author:
Raymond Robertson and Arianna Rossi
Publication Date:
06-2011
Content Type:
Working Paper
Institution:
Center for Global Development
Abstract:
Globalization of production has created an environment for labor-management relations that involves international actors and spans countries, going beyond the boundaries of the traditional workspace. The dramatic changes brought about by globalization led to the emergence of new cross-border forms of industrial relations. This paper analyses the case of the International Labour Organization's Better Factories Cambodia (BFC) project as a transnational instrument to create the institutional space for industrial relations in Cambodia. Based on the principle of social dialogue among the social partners (the national Government and workers' and employers' organizations) as well as with global buyers, BFC's multistakeholder approach reaches beyond the workplace and may be a key instrument of industrial relations because it bridges the gap between the sphere of production and that of consumption. The empirical results reveal some of the particular strengths of the program.
Topic:
Development, Globalization, Industrial Policy, International Trade and Finance, and Labor Issues
Political Geography:
Cambodia and Southeast Asia

19. Direct Redistribution, Taxation, and Accountability in Oil-Rich Economies: A Proposal

Author:
Shantayanan Devarajan, Hélène Ehrhart, Tuan Minh Le, and Gaël Raballand
Publication Date:
12-2011
Content Type:
Working Paper
Institution:
Center for Global Development
Abstract:
To enhance efficiency of public spending in oil-rich economies, this paper proposes that some of the oil revenues be transferred directly to citizens, and then taxed to finance public expenditures. The argument is that spending that is financed by taxation—rather than by resource revenues accruing directly to the government—is more likely to be scrutinized by citizens and hence subject to greater efficiency. We develop the case as follows: First, we confirm that public expenditure efficiency is lower in oil-rich countries compared with other developing countries. Second, we develop a theoretical model to explain why citizens' scrutiny over public expenditure can be increased by transferring oil revenues to citizens and then taxing them. By receiving transfers and then paying taxes, citizens are better informed about the level of government revenue, and they have an incentive to ensure that their taxes are spent on public goods. Third, we show empirically that enhanced citizens' scrutiny is associated with more efficient government spending decisions and that accountability is stronger in countries that rely more on taxation to finance public spending. We conclude that, while it may be difficult to implement such a proposal in existing oil producers, there is scope for introducing it in some of Africa's new oil producers.
Topic:
Economics, International Trade and Finance, and Oil
Political Geography:
Africa

20. A China Round of Multilateral Trade Negotiations

Author:
Arvind Subramanian and Aaditya Mattoo
Publication Date:
12-2011
Content Type:
Working Paper
Institution:
Center for Global Development
Abstract:
Until recently, the World Trade Organization (WTO) has been an effective framework for cooperation because it has continually adapted to changing economic realities. The current Doha Agenda is an aberration because it does not reflect one of the biggest shifts in the international economic and trading system: the rise of China. Even though China will have a stake in maintaining trade openness, an initiative that builds on but redefines the Doha Agenda would anchor China more fully in the multilateral trading system. Such an initiative would have two pillars. First, a new negotiating agenda that would include the major issues of interest to China and its trading partners, and thus unleash the powerful reciprocal liberalization mechanism that has driven the WTO process to previous successes. Second, new restraints on bilateralism and regionalism that would help preserve incentives for maintaining the current broad non-discriminatory trading order.
Topic:
Economics, Industrial Policy, and International Trade and Finance
Political Geography:
China, Israel, and Asia